Legal Ethics Opinion No. 1466
Real Estate Representation: Application of the Wet Settlement Act
to Real Estate Closing Handled by Separate Attorney for Purchaser
and Seller
You have indicated that a real estate transaction involves one
attorney who represents the seller and another attorney who
represents the purchaser. You further indicate that the attorney
representing the purchaser will do the "closing" with his client
and lender and then disburse funds to the seller's attorney who
has drawn the deed and who will assume responsibility for paying
off existing mortgages, real estate commissions and other costs.
You have asked the committee to opine as to the form of funds
which must be used when the purchaser's attorney disburses to the
seller's attorney. Specifically, you have inquired whether those
funds must be disbursed in the form of certified funds only or
may be disbursed in the form of certified funds or a cashier's
check or in the form of an attorney's trust account check which
is backed up by certified or cashier's funds received by the
attorney from his client plus lender's funds which conform to the
Wet Settlement Act, Va. Code 6.l-2.l0. You have also asked
whether any cost incurred by the purchaser's attorney to secure a
certified or cashier's check may be passed along to the seller's
attorney and thus to the seller.
As to your first inquiry, the committee is of the opinion that
the conclusions articulated in LEO #l83, requiring strict
compliance with the Wet Settlement Act as to the form of funds
acceptable for immediate disbursement in real estate settlements,
are equally applicable to the circumstances you describe. Thus,
the committee opines that when the purchaser and seller in a real
estate transaction each are represented by separate counsel
rather than by one "settlement or closing attorney", any
disbursement of purchaser's and lender's funds made to seller's
attorney by purchaser's attorney must be made utilizing the form
of funds enumerated in the Wet Settlement Act.
With regard to your second inquiry, as to any cost incurred by
purchaser's attorney for securing funds in the form required by
the Wet Settlement Act, the committee is of the opinion that its
prior Legal Ethics Opinions #l204, l228, and l346 are dispositive
of the issue. Thus, such charges may not be passed on to the
other party, who is represented by separate counsel, without the
other party's prior agreement.
Committee Opinion
June 22, 1992